EM LATAM CREDIT: Kallpa Generacion: New Issue Fair Value

(KALLPA; Baa3/NR/BBB-)
“NEW DEAL: Kallpa Generacion SA $Benchmark 10Y +170 Area” – Bbg

IPTs 10Y: T+170bp Area
FV 10Y: T+135bp Area

• Peru’s largest electricity generation company, privately owned Kallpa Generacion, mandated investor meetings ahead of potential issuance of USD benchmark senior unsecured 10-year notes. Use of proceeds will be to buy back any and all 2027 notes with USD650mn outstanding.

• KALLPA 2032s were issued in late January 2025 at +163bp, last quoted at a G-spread of T+128bp. We note that at the time of issuance demand was strong as investors valued that bonds were issued at the OPCO level as well as the scarcity of Peru corporate bonds, especially those rated investment grade.

• In the Peru electric space, we have comps Niagara Energy SAC (NIAENE; Baa3/BBB-/BBB-) which has holding company bonds maturing in 2034 quoted at a G-spread of T+152bp. Peru dominant electricity transmission company Transmantaro (TRANSM; Baa3/NR/BBB) has 10.8-year WAL notes at a G-spread of T+130bp.

• In nearby Chile we have comps including vertically integrated Chile electric company COLBUN (COLBUN; Baa2/BBB/BBB+) that issued a new 10-year at T+120bp, last quoted at a G-spread of T+110bp. The spread between KALLPA 32s and COLBUN 32s was last at 16bp and has averaged 16bp this year. Global electric generator AES’s Chile subsidiary AES Andes (Baa3/BBB-/BBB-) has 7-year notes at a G-spread of 181bp.